A survey conducted last year by BCG shows many American companies moving back their factories from China. 24% of the respondents were engaged actively in the process of shifting their production facilities or planning to conduct it over next two years. Another survey carried out by American Chamber of Commerce in China reflects the same scenario. 25% of the participants had already moved out or planning to take their operations out of China. Among them 40% are shifting base to USA, Canada and Mexico while 50% aims for other developing countries in Asia.
The situation is exactly opposite of the claims made by presidential candidates like Donald Trump. He has been raising a storm over America losing out manufacturing jobs to China in his political campaigns. He cited the trade deals and support for free trade had cost America immensely. But the candidates are creating a ruckus over an issue of the past which is clear from the reports.
There are several reasons that the job market is moving out of China. Once it was the favorite destination of American and other first world countries for manufacturing goods due to availability of cheap labor. The work in the assembly lines used to be an easily accessible way for the population to earn an income. America lost around two million jobs between 1999 and 2011 because of rise in Chinese imports, as The Journal of Labor Economics reports.
But the Chinese economy has been undergoing change along with its labor market. The government in a bid to promote welfare of the workers has set barriers of minimum wage. The economy currently provides many jib opportunities and working in factories is not that appealing anymore. The salaries offered have been increased to attract workers by the production managers. Together with minimum wage, the cost per employee in China now matches the figures of USA or Canada. It is not profitable any more for the companies to continue their operations based from China. It is true that most of them are not removing their operations completely, but moving it out to other locations for saving costs and raising profits.